Support measures for businesses amidst the Coronavirus
In these rapidly changing times, many businesses need support and help to navigate through the dramatic economic conditions the pandemic has presented.
Updated 16 November 2020
The Shipleys LLP team are closely following all the announcements and papers released by Government Bodies, including the Treasury. On this page, which is being updated as fresh announcements emerge, you’ll find an overview of the support measures in place for businesses. You can find more information from the Government here.
What's new on 16 November - see the relevant sections below:
- The Government has released more details about the Local Restrictions Support Grants being distributed by Local Authorities
- The Coronavirus Job Retention Scheme has been extended till 31 March 2021, with the level of grant available reverting to August's amount. Also the Scheme will open up to employers and employees not previously enrolled on the Scheme. The Government has now released details on how to claim.
Suppport with wages - the Coronavirus Job Retention Scheme
The Government has extended the Job Retention Scheme until 31 March 2021. It will be broadly the same but with some differences to the Scheme which ran up until 31 October 2020.
The Scheme closed to new entrants on 30 June. Employers had until 31 July to make any claims in respect of the period to 30 June. From 1 July, employers could bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. From this date, only employees that employers had successfully claimed a previous grant for were eligible for more grants under the scheme.
From August 2020, the level of Government grant provided through the Scheme has been slowly tapered to reflect people returning to work. The tapering timeline was as follows:
June and July 2020: The Government paid 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers were not required to pay anything.
August 2020: The Government paid 80% of wages up to a cap of £2,500. Employers paid ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
September 2020: The Government paid 70% of wages up to a cap of £2,187.50. Employers paid ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
October 2020: The Government paid 60% of wages up to a cap of £1,875. Employers paid ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represented 23% of the gross employment costs the employer would have incurred had the employee not been furloughed
The Job Retention Scheme from 1 November 2020
The extended Job Retention scheme will run from 1 November 2020 to the 31 March 2021 and will generally operate as the previous scheme did. Businesses will be paid upfront to cover wages costs. The level of the grant will revert to the amount available under the Scheme in August.
This means the Government will pay 80% of wages up to a cap of £2,500. Employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.
The Government plans to review the policy in January to decide whether improved economic circumstances warrant asking employers to contribute more.
Similarities to the previous Job Retention Scheme
Both flexible and full-time furloughing will be allowed. Employees can be on any type of contract and employers will be able to agree any working arrangements with employees. Employers are still able to choose to top up employee wages above the Scheme grant at their own expense if they wish.
Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. These calculations are expected to broadly follow the same methodology as the previous Scheme.
When claiming the Job Retention Scheme grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days. They will need to report hours worked and the usual hours an employee would be expected to work in a claim period. For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
Agents, like accountants and tax advisers, are still permitted to process claims on a client's behalf.
Differences in this new version of the Scheme:
- There is no requirement for employers to have previously furloughed employees they now want to include in the Scheme.
- Employees who were previously excluded, as they were not included in a payroll RTI submission before 19 March 2020, can now be brought into the scheme provided they were included in a payroll RTI submission before midnight on 30th October 2020.
This should mean mean all employees included on a payroll in September 2020 are eligible and, provided the RTI submission for the October payroll was made on or before 30 October, new employees who started in that month can be included. If the October RTI submission was submitted on or after 31 October 2020 or has not yet been submitted by an employer, their new starters in October will not be eligible for the scheme.
The Job Retention Scheme from 1 November is open to all employers with a UK bank account and UK PAYE schemes. Neither the employer nor the employee needs to have previously used the Scheme.
The Government expects that publicly funded organisations will not use the Scheme, as has already been the case, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.
How and when to claim
The Government has now released information on how and when to claim.
Employers will need their Government Gateway user ID and password they received when they registered for PAYE online. If you do not finish your claim in one session, you can save a draft. You must, however, complete your claim within seven days of starting it.
All claims for periods from 1 July 2020 to 31 October 2020 must be submitted no later than 30 November 2020.
Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day. See this timetable published by the Government:
|Claim for furlough days in:||Claim must be submitted by:|
|November 2020||14 December 2020|
|December 2020||14 January 2021|
|January 2021||15 February 2021|
|February 2021||15 March 2021|
|March 2021||14 April 2021|
Job Support Scheme - postponed
In his Winter Economy Plan statement, the Chancellor announced a replacement for Coronavirus Job Retention Scheme in the form of the Job Support Scheme (JSS). Given the Job Retention Scheme has now been extended till 31 March 2021, the Job Support Scheme is unlikely to be introduced until Spring 2021. For more information about what had been intended for the Scheme see here.
Job Retention Bonus - cancelled
In his Summer Statement, the Chancellor announced a Job Retention Bonus would be introduced to encourage employers to support those people who have been furloughed. The Job Retention Bonus was intended to give a one-off payment of £1,000 to UK employers for every previously furloughed employee who remained continuously employed through to the end of January 2021.
On 5 November the Chancellor extended the Coronavirus Job Retention Scheme till 31 March 2021 and as a result cancelled the introduction of the Job Retention Bonus Scheme scheduled for February 2021
For details on what had been planned for the Scheme, see here
Job creation grants
On 8 July, the Chancellor's Summer Statement included a number of grants designed to encourage job creation and protection - particularly for young people.
The Kickstart Scheme aims to provide “hundreds of thousands of high quality six-month work placements” for those aged 16-24, who are on Universal Credit and are considered to be at risk of long-term unemployment. Government funding for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week plus the associated employer NICs and employer minimum automatic enrolment contributions (a maximum of about £6,500). There is to be no cap on the cost of the scheme. See more information here.
There is also £1,500 per job placement available for setup costs, support and training.
Funding is available following a successful application process. Applications must be for a minimum of 30 job placements. If you are unable to offer this many job placements, you can partner with other organisations to reach the minimum number. Some organisations like Chambers of Commerces are helping small businesses partner up to utilise the scheme. There are also regional contacts to help employers with the kickstart scheme process - see here.
If you are a representative applying on behalf of a group of employers, you can get £300 of funding per job placement to support with the associated administrative costs of bringing together these employers. For more information, see here.
Information about applying for the grant can be found here.
Employers who provide work experience for 16-24-year-olds in work placements and training will receive a payment of £1,000 per trainee. Provision of traineeships and eligibility for them will be extended to those with Level 3 qualifications and below, to ensure that more young people have access to training. Detail regarding the grant has yet to be published. For more information see here.
Payments for employers who hire new apprentices
Employers in England will receive a new payment of £2,000 for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over.
The scheme will run from 1 August 2020 to 31 January 2021. These payments will be made in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices, and any of those aged under 25 with an Education, Health and Care Plan. More detail about the Scheme is expected from the Government. In the meantime, see here.
Business Rates and Grants
All retail, hospitality and leisure businesses will be exempt from paying business rates for 12 months from March 2020 in a bid to combat the financial damage caused by the COVID-19 outbreak.
Local Restrictions Support Grant Schemes
In response to November's lock-down measures the Government announced 3 new grant schemes for those businesses affected by the Coronavirus restrictions. The grants from these schemes will be distributed by Local Authorities.
- The Local Restrictions Support Grant (for open businesses) - LRSG (Open) - supports businesses that have been severely impacted due to temporary local restrictions. It is for businesses that have not had to close, but which have been severely impacted due to local restrictions (Local COVID alert levels: High or Very High). Eligible businesses may be entitled to a cash grant from their local council for each 28 day period under local restrictions. The level of grant will be based on the rateable value of the business property on the date of the start of the local restrictions. For more information, including eligibility criteria and how to apply see here
- The Local Restrictions Support Grant (for closed businesses) - LRSG (Closed) - supports businesses that have been required to close due to the national restrictions between 5 November and 2 December 2020. Eligible businesses may be entitled to a cash grant from their local council for each 28 day period under national restrictions. Similar to the grant for open businesses, the level of grant is based on the rateable value of the business property on the first full day of restrictions.. For more information, including eligibility criteria and how to apply see here.
- The Additional Restrictions Grant - this grant supports businesses that are not covered by other grant schemes or where additional funding is needed. In particular, it's deisgned to give support to closed businesses that do not directly pay business rates as well as businesses that do not have to close but which are impacted. It also enables Local Authorities to make larger grants than those stipulated in LRSG (Closed). For more information see here.
Small Business and Retail, Hospitality and Leisure grants
During Spring 2020, the Government gave £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000. Local Authorities in England wrote to those eligible. For more information, see here.
Through the Small Business Grant Fund the Government also provided a one-off grant of £10,000 to around 700,000 business eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. Local Authorities in England have written to those who are eligble. For more information see here.
Note: The Government closed the Small Business and Retail, Hospitality and Leisure grants schemes on 28 August.
Further business rates relief
In England, eligible charities and community amateur sports clubs may apply for relief of up to 80%. Also ratepayers experiencing financial difficulties may apply to their local authority for hardship relief which may grant a discount or exemption to the ratepayer at their discretion.
In England, nurseries do not have to pay business rates for the 2020-21 tax year. See here
You can find a full list of exemptions, and types of relief for:
New grants of between £1,000 - £5,000 will be made available to help small and medium sized businesses access new technology and other equipment as well as professional, legal, financial or other advice.
The support will be fully funded by the Government with no obligation for businesses to contribute financially. The funding has been allocated to Growth Hubs within each Local Enterprise Partnership (LEP) area to distribution. For more information see here
Statutory Sick Pay (SSP)
The Coronavirus Statutory Sick Pay Rebate Scheme was announced in the March Budget as part of a package of support measures for businesses affected by the COVID-19 outbreak. Employers who are eligible will be able to make their claims through a new online service. Accountants and tax agents will also be able to make claims on behalf of employers. See here.
This scheme will allow small and medium-sized employers, with fewer than 250 employees, to apply to HMRC to recover the costs of paying coronavirus-related SSP. Connected companies and charities can also use the scheme if their total combined number of PAYE employees was fewer than 250 on the 28 February 2020. View the eligibility criteria here.
Employers who qualify will receive repayments at the relevant rate of SSP that they have paid to current or former employees for eligible periods of sickness starting on or after 13 March 2020.
HMRC has released details of what to have ready to make the claim and the records employers must keep. You can view it here.
By way of a short overview, The Coronavirus Statutory Sick Pay Rebate Scheme repays employers the current rate of SSP that they pay to current or former employees for periods of sickness starting on or after 13 March 2020. If you’re an employer who pays more than the current rate of SSP you can only claim the current rate amount.
The repayment covers up to 2 weeks starting from the first day of sickness, if an employee is unable to work because they either:
- have coronavirus
- cannot work because they are self-isolating at home
- are shielding because they’ve been advised that they’re at high risk of severe illness from coronavirus
- who are self-isolating because they’ve been notified by the NHS or public health bodies that they’ve come into contact with someone with coronavirus
Employees do not have to give you a doctor’s fit note for you to make a claim
Since the end of May, employers have been able claim for employees who are self-isolating because they’ve been notified by the NHS or public health bodies that they’ve come into contact with someone with coronavirus. From 26 August, employers could use this scheme to claim for employees who have been notified by the NHS to self-isolate before surgery.
Those who are not eligible for SSP, for example the self-employed or people earning below the Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance. See more information here.
Business Interruption Loans
Loan support for businesses is being delivered through four Government-backed routes:
- Business Bounce Back Loan Scheme - Small businesses can borrow between £2,000 and £50,000. See more information here.
- Coronavirus Business Interruption Loan Scheme (CBILS) for small to medium sized businesses, the Government provides loans of up to £5m per business. The British Business Bank has more details of the Coronavirus Business Interruption Loan Scheme (CBILS) along with answers to frequently asked questions. View it here.
- Coronavirus Large Business Interruption Loan Scheme (CLBILS) for larger businesses provides a Government guarantee of 80% to enable banks to make loans of up to £200m. See here
- The Covid-19 Corporate Financing Facility (CCFF) for large firms - the Bank of England will buy short term debt from larger companies. This will support a company if it has been affected by a short-term funding squeeze, and allow it to finance its short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. View more information here.
In response to the November lockdown the Chancellor announced that the closing date for the Government’s three Coronavirus business interruption loan schemes and the Future Fund would be extended till 31 January 2021. This extended the previously scheduled closing date of 30 November 2020.
Eligibility Criteria for the Business Bounce Back Loan Scheme (BBLS)
This loan scheme was designed to help small and medium-sized businesses borrow between £2,000 and £50,000. The Government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
Under the original BBLS arrangements, the borrower did not have to make any repayments for the first 12 months, with the government covering the first 12 months’ interest payments. The maximum loan repayment term was six years. At the end of the September, the Chancellor announced under new ‘Pay as You Grow’ options for BBLS that:
- New and existing borrowers will have the option to repay their loan over a period of up to ten years.
- UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months. This option can be used up to three times.
- Alternatively, businesses can pause their repayments entirely for up to six months, although this option is only available after six payments have been made and can be used just once.
Qualification criteria for the BBLS
You can apply for a loan if your business:
- is based in the UK
- has been negatively affected by coronavirus
- was not an ‘undertaking in difficulty’ on 31 December 2019
- is not in bankruptcy, liquidation or undergoing debt restructuring
You are not eligible to apply if your business:
- is a bank, insurer or reinsurer (but not an insurance broker)
- a public-sector body
- a further-education establishment, if you are grant-funded
- a state-funded primary or secondary school
- if you have secured funding from the Coronavirus Business Interruption Loan Scheme - however, If you’ve already received a loan of up to £50,000 under the CBILS and would like to transfer it into the Bounce Back Loan Scheme, you can arrange this with your lender until 4 November 2020.
Note: the Business Bounce Back Loan Scheme is due to close to new applicants on 31 January 2021.
Eligibility Criteria for the Coronavirus Business Interruption Loan Scheme (CBILS)
Details of the loan assistance can be viewed here and the lenders who are signed up for the Scheme can be viewed here. The British Business Bank has published this eligibility check for SMEs to complete ahead of contacting one of the lenders. View it here.
At the end of September, the Chancellor announced CBILS lenders will be allowed to extend the term of a loan up to ten years, while retaining the benefit of the 80% government guarantee.
In summary, to be eligible for a facility under CBILS, a small business (SME) must:
- Be UK-based in its business activity
- Have an annual turnover of no more than £45 million
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
- Self-certify that it has been adversely impacted by the coronavirus (COVID-19).
Importantly, access to the Scheme has opened up to smaller businesses facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. Businesses are encouraged to re-contact their lenders if they have previously been unsuccessful in securing funding.
Businesses will need to apply for the Coronavirus Business Interruption Loan Scheme (CBILS) by 31 January 2021.
Eligibility Criteria for the Coronavirus Large Business Interruption Loan Scheme (CLBILS)
The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides a Government guarantee of 80% to enable banks to make loans of 25% of a company's annual turnover up to a maximum of £200million.
The CLBILS is being offered through a list of accredited lenders listed on the British Business Bank website. Facilities backed by a guarantee under CLBILS are offered at commercial rates of interest.The Government will provide lenders with an 80% guarantee on individual loans for businesses that would be otherwise unable to access the finance they need.
The elibility criteria is as follows:
- the business must be based in the UK
- the business has an annual turnover of over £45 million
- the business has not received a facility under the Bank of England’s COVID-19 Corporate Financing Facility (see below)
A business will also need to demonstrate:
- it would be viable were it not for the pandemic
- it has been affected by coronavirus
- the loan will enable it to trade out of any short-term to medium-term difficulty resulting from coronavirus
- If you’re borrowing more than £50 million you must agree to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Check the eligibility requirements.
- Lenders will need further information to confirm eligibility. All lending decisions remain fully delegated to the accredited lenders.
Businesses from any sector can apply, except for the following:
- banks and building societies
- insurers and reinsurers (but not insurance brokers)
- public-sector organisations, including state-funded primary and secondary schools. Note since 4 May 2020 further education establishments were eligible for the scheme.
For more information and to apply, see here.
Businesses will need to apply for the Coronavirus Business Interruption Loan Scheme (CBILS) by 31 January 2021.
Eligibility for the Covid-19 Corporate Financing Facility (CCFF)
For larger businesses, details of the eligibility criteria for the Covid-19 Corporate Financing Facility (CCFF) can be found here
The Covid-19 Corporate Financing Facility will remain open until 22 March 2021. Where a company has exhausted all other options, and is of strategic importance to the UK, the government may also consider providing bespoke financial support.
On 9 October 2020 the Treasury introduced a new access review process for the CCFF. The Treasury will continue to assess the credit quality of firms in the CCFF and will now ask firms to provide an up to date credit rating when requesting financing from the scheme. Where the firm’s credit rating has dropped below investment grade, the Treasury will ask for additional information before deciding the appropriate level of support. Find out more here and here
The Self-Employed Income Support Scheme
Applications for the second grant (which opened on 17 August) have now closed. This could be claimed for even if you did not make a claim for the first grant. This second taxable grant was worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.
In Autumn 2020 the Chancellor announced the SEISS will be extended from 1 November 2020, in the form of two new grants. Each is available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.
In response to the November lockdown, the Government has announced it will provide a taxable grant covering 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500.
The grant has been increased from the previously announced level of 40% of trading profits to 80% of trading profits, for 1 November 2020 to 31 January 2021.
Payments will also be made more quickly with the claims window being brought forward from 14 December to 30 November.
The scheme’s new terms are:
- The new SEISS grant will only be available to self-employed individuals who were eligible for the past scheme, who are actively continuing to trade but are facing reduced demand due to Covid-19.
- The two taxable grants will be paid in two lump sum instalments each covering a three-month period. The first grant will cover a three-month period from 1 November 2020 until 31 January 2021.
- The Government will provide a taxable grant covering 80% of average past profit for the 3 months to 31 January 2021 to a maximum of £7,500.
- The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.
The grants are subject to income tax and National Insurance contributions but does not need to be repaid. Recipients are warned to be mindful of when the tax is due on the various grants - see this article.
Find out more about the SEISS here
Eligibility criteria for the Scheme:
The Scheme is open to a self-employed individual or a member of a partnership if they:
- have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
- declare that they intend to continue to trade and either are currently actively trading but are impacted by reduced demand due to coronavirus, or were previously trading but are temporarily unable to do so due to coronavirus
How to claim
The online service for the next grant will be available from 30 November 2020. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.
Note: as was the case with the previous two grants, it's highly likely a self-employed person's accountant, tax agent or adviser cannot make the third and fourth claim on their behalf. A self-employed person must make the claim themself. Do get in touch with your Shipleys contact for advice ahead of making the submission.
If people have only just started out as a self-employed person and haven’t completed a tax return yet, they will not be able to benefit from the Scheme and are directed to make use of the new welfare arrangements, such as Universal Credit. See here.
Support for Charities
In addition to the Charity Commission Guidance released in March, the Government announced in April a fresh set of measures to help charities facing financial difficulties as a result of the Coronavirus situation. On 17 April it also released information regarding processing ticket refunds for cancelled charity events during the coronavirus (COVID-19) pandemic.You can find an overview of all the current support measures for Charities in our Charity Update pages here.
Support for Exporters
The Government has released guidance for UK businesses trading internationally. See more here
In particular, financial support is available through UK Export Finance (UKEF). This organisation works with banks and insurance brokers to help companies of all sizes fulfil and get paid for export contracts. It provides guarantees, loans and insurance on behalf of the Government that can protect UK exporters facing delayed payments or transit restrictions.
Help from UKEF includes:
- Disruption due to late payments - UKEF can help businesses ease cash flow constraints by guaranteeing bank loans through its Export Working Capital Scheme
- Concerns about getting paid - UKEF offers an export insurance policy that can help you recover the costs of fulfilling an order that is terminated by events outside your control
- Raising finance - UKEF can also support finance for overseas buyers through the Direct Lending Facility Scheme, so they can continue to buy your goods and services
- Exporting to China - UKEF has over £4 billion of capacity to support UK firms exporting to China, as well as significant capacity across other markets affected by coronavirus (COVID-19) to help cover these risks.
To find out if UKEF covers your region, email email@example.com
Support for high growth and SME businesses focusing on research and development
On 20 April the Chancellor announced a £1.25billion support package for high growth companies and other businesses driving innovation during the COVID-19 crisis. The package includes a new £500 million loan scheme for high-growth firms - the Future Fund - and £750 million of targeted support for small and medium sized businesses focusing on research and development. For more information see here.
The Future Fund
The £500 million Future Fund is delivered in partnership with the British Business Bank. It provides UK-based companies with between £125,000 and £5 million from the Government, with private investors at least matching the Government commitment. The loans automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. Find out more here.
On the 30 June 2020 the Government announced that more firms could now benefit from the Future Fund. In particular companies which have participated in accelerator programmes are now eligible for scheme - see here.
Note: The Future Fund will close to applications on 31 January 2020.
Sustainable Innovation Fund
On 27 June the Government announced a new Sustainable Innovation Fund. This £200m fund from the Government is open to companies across the UK who need urgent financial support to keep their cutting-edge projects and ideas alive. See here.
This funding, delivered through Innovate UK, forms part of the wider £750 million package of grants and loans announced in April to support innovative firms. It sits alongside the £500 million Future Fund (see above). Businesses can apply for support through the Sustainable Innovation Fund by visiting the Innovate UK website from Monday 29 June. See here.
Targeted support for innovative small and medium-sized businesses via Innovate UK
The £750 million of targeted support for the most R&D intensive small and medium size firms is now available through Innovate UK’s grants and loan scheme. Innovate UK, the national innovation agency, is accelerating up to £200 million of grant and loan payments for its 2,500 existing customers on an opt-in basis. Find out more here.
Time to pay arrangement for outstanding tax liabilities
HMRC has a set up a phone helpline to support businesses and self-employed people concerned about not being able to pay their tax due to coronavirus. SME businesses have now started getting support to delay payment of their VAT and PAYE liabilities.
For those who are unable to pay due to coronavirus, HMRC will discuss your specific circumstances to explore:
- agreeing an instalment arrangement
- suspending debt collection proceedings
- cancelling penalties and interest where you have administrative difficulties contacting or
- paying HMRC immediately
The helpline number is 0800 0159 559 - and is an addition to other HMRC phone contact numbers. The helpline is open from Monday to Friday 8am to 8pm, and Saturday 8am to 4pm (excluding bank holidays).
What to have to hand before you call HMRC
Businesses are strongly advised to be prepared for the conversation with HMRC and have the following key information to hand:
- Description of the business
- Annual total liability to tax
- Amounts requesting to be deferred
- Proposed period of deferral
- Reasons for requesting deferral (directly linked to COVID-19)
- Details of discussions with other stakeholders / lenders
- Details of other actions taken to mitigate cash outflows
- A short-term cashflow forecast
- Authority to confirm directors will ensure all instalment payments will be met
VAT payments due between 20 March - 30 June 2020 were permitted to be deferred.
In September 2020 the Government announced a ‘New Payment Scheme’ for VAT deferral. It offered businesses that deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021/22 in 11 equal instalments. All businesses that took advantage of the VAT deferral are eligible and can use the Scheme. However, they will need to opt in using a process HMRC will launch in “early 2021.
Find out what you need to do now the deferral period has ended. See here.
The VAT Payments on Account Scheme works on an estimation of historic figures. Given the Coronavirus crisis, businesses may find their true liability has currently reduced. We have written an overview on the options to businesses faced with this situation. See here.
A reduced 5% VAT rate will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. This temporary rate will apply from 15 July 2020 to 31 March 2021 (an extension to the previously announced closing date of 12 January 2021). For more information see here and here
It's yet to be confirmed if the 5% rate of VAT will also apply to supplies of accommodation and admission to attractions across the UK. For more information see here.
Making Tax Digital for VAT
Businesses with VAT periods ending after 31 March 2020 were due to have ensured their digital links were Making Tax Digital (MTD)-friendly, however, HMRC has just extended the deadline.
In response to the impact of COVID-19, it has announced it is providing all MTD businesses with more time to put in place digital links between all parts of their functional compatible software. This means that all businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.
So any accounting-related software (for example a hotel booking system that produces invoices to a customer) must have working digital links to the business accounting system by then.
Be mindful the Government has announced that from 1 April 2022 all VAT registered businesses must follow its Making Tax Digital for VAT rules regardless of turnover. For more information see here
The Self-Assessment payments which were due on the 31 July 2020 were initially deferred until 31 January 2021. This measure also applied to anyone who was due to pay their second Self-Assessment payment on account on 31 July 2020. You did not need to tell HMRC that you were deferring your payment on account. Also those who could still make the payment by 31 July 2020 as normal were encouraged to do so.
In his Winter Economy Statement the Chancellor announced the self-employed and other taxpayers will be given more time to pay taxes due in January 2021.
Under his Enhanced Time to Pay Scheme, taxpayers with up to £30,000 of self-assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months.
This means that self-assessment liabilities originally due in July 2020 will not need to be paid in full until January 2022. Any self-assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.
From 25 March the Government announced businesses would have an additional 3 months to file accounts with Companies House, to help companies avoid penalties as they dealt with the impact of COVID-19.
On 25 June 2020, the Corporate Insolvency and Governance Act 2020 received royal assent. The measures introduced by the Act (with effect from the 26 and 27 June) are designed to relieve the burden on businesses during the coronavirus outbreak and allow them to focus all their efforts on continuing to operate. Companies and other types of business registered at Companies House will get more time to file accounts. Companies House is in the process of updating all deadlines on its service.
The Government has also said it is in close consultation with company representative bodies, legal practitioners and others, to look at solutions for the impact COVID-19 may have on companies’ ability to hold Annual General Meetings. Updated guidance on this matter will be published in due course.
IR35 changes delayed
The forthcoming changes regarding off payroll work (IR35) have fortunately been delayed. On 17 March 2020 the Chief Treasury Secretary Steve Barclay announced that the IR35 tax reforms would be pushed back by one year. The changes were due to come in from 6 April 2020. See here.
Things to consider:
Your insurance policies
The Government has stated that it considers that its current statements are sufficient to bring interruption to business policies into effect and require insurance companies to make good on those policies. Do though check with your insurance provider. A recent test case is helping those businesses who have had difficulty claiming under their business interruption policies. See here.
The priority for most employers will no doubt to be to retain staff if they can. Please refer to the Government proposed support for wages above. In the meantime, and in your discussions with staff, it is sensible to be as open and transparent as possible about the situation the business is in, the measures you are taking to enable it to survive and what you are asking of them. There is some information from the Government here and here
If you have contracts in place for the supply of goods or services it is important to check if there are clauses to cover you for force majeure. This relates to what happens if something stops or delays you or someone else performing the contract due to factors outside your or their control. Check the wording of those clauses to be clear if it covers you for the pandemic and what is or isn’t covered in terms of disruption. Get legal advice is necessary and if you need introductions to legal contacts, please let us know.
Other financing measures
In addition to the Government support, other lenders are initiating financing options to help businesses in areas such as spreading the cost of equipment purchases, short-term loans, finance against unpaid loans etc. Talk to one of our team for introductions.
Summary and can we help?
We will continue to monitor the announcements from the Government and update this page as new guidance and legislation emerges. In the meantime, please do get in touch with your usual Shipleys’ contact if you need any further advice or call one of our offices.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.
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